While exciting AI features and products dropped left and right over the past several months, even bigger changes were unfolding in the drug supply chain. It’s partially my fault for not being more vocal. Since January, pharmacy benefit managers have had to reconsider their rebate-driven business models, grapple with FTC lawsuits, and maneuver around state legislation intended to unwind vertically integrated pharmacies and PBMs.

It’s been a circus. My main takeaway is that the walls are slowly closing in on PBMs from all sides.

In this article, I’ll refresh you on PBMs, walk through how they’re being targeted on multiple fronts, and explain how this may (or may not) impact patients and the health system once all is said and done.

Pharmacy Benefit Managers (PBMs) run the drug supply chain. Picture the drug supply chain as a three-way handshake—manufacturers, insurers, and pharmacies. PBMs plop themselves right in the middle and sign a separate deal with each party:

By centralizing all that cash flow you see above in the graphic, PBMs promise “efficiency,” but the setup also gives them outsized power to decide which drugs patients actually receive and at what price (which is where all the drama stems from).

PBMs make money in a couple of different ways:

Add it up and the PBM gets paid at every step: a fee to manage the benefit, a slice of the rebate, a margin on the claim, and retail profit if it fills the script itself.

PBMs have taken center stage in drug pricing debates, and many are pointing the finger directly at them. While the U.S. government is testing several strategies to lower drug prices (which you can read about in my Physician’s Guide to the Drug Supply Chain), targeting PBMs has gained traction, even at the state level.

President Trump signed the Consolidated Appropriations Act that includes the most significant federal PBM reform in decades. Key provisions (taking effect in 2028 for Medicare Part D):

These reforms apply to Medicare Part D and commercial markets, setting the tone for the rest of the healthcare system.

In October 2025, Express Scripts announced it would transition to a rebate-free model. More recently, Optum Rx announced it’s shifting to a fee-based PBM model, where clients pay a clear per-member fee rather than Optum being paid off drug list prices. Other PBMs will likely follow the same direction.

States are taking matters into their own hands. Several have already passed PBM transparency laws: Arkansas, West Virginia, and North Dakota require PBMs to disclose rebate amounts and pass-through pricing.

Arkansas went further. In April 2025, Governor Sarah Huckabee Sanders signed Act 624, the first state law in the country to ban PBMs from owning pharmacies outright. The target was obvious: CVS Caremark, Optum Rx, and Express Scripts—companies that simultaneously negotiate drug prices and fill the prescriptions they're negotiating over.

It never went into effect, though. A federal judge blocked it in July 2025, finding the law likely unconstitutional on two grounds.

Similarly, Tennessee passed the FAIR Rx Act in May 2026, banning PBMs from owning pharmacies. CVS, for example, would have to divest its pharmacies or leave the state entirely. CVS Caremark and Express Scripts sued immediately, running a similar legal argument: unconstitutional, and preempted by federal law. This is where ERISA enters the picture.

Illinois is the latest. Governor Pritzker signed the Prescription Drug Affordability Act last summer, targeting two things: forcing PBMs to disclose granular pricing data (what the plan paid, what the pharmacy got, what rebate the PBM kept) and banning patient steering toward PBM-owned pharmacies. On Tuesday, PCMA filed suit in federal court to block it—same argument: ERISA preempts the whole thing. They also asked Illinois to cover their attorney fees, which tells you how confident they are.

Arkansas, Tennessee, Illinois… you can see the playbook PBMs are running. Every state reform gets met with the same federal court challenge: ERISA preempts it.

The FTC filed lawsuits against all three major PBMs—CVS Caremark, Express Scripts, and Optum Rx—back in 2024, alleging they inflated insulin prices through opaque rebate arrangements with drug manufacturers. Slowly, these three big PBMs are settling:

Note, there’s no monetary penalty for Express Scripts, and likely won’t be for Optum Rx or CVS Caremark.

Drug pricing in the U.S. is multifactorial—there’s no single bad actor. That’s my conclusion after publishing my whitepaper on drug pricing and dissecting each middleman in the supply chain. PBMs are certainly a driver of high drug costs for patients, but they’re not the driver—everyone in the drug supply chain plays a role. So these federal and state policies targeting PBMs as the middlemen are a step in the right direction, but they won’t solve the larger issue of high drug prices. Plus, the timeline of these policies is long. The CAA 2026 reforms don't kick in until 2028. The FTC settled with all three big PBMs—and Cigna said, without flinching, that the Express Scripts settlement won't affect their bottom line. That tells you everything about how much cushion was always in the system.

What we need to do is follow the money: if you change how money flows, you change the dynamics of the drug supply chain. When PBMs get paid flat fees instead of a percentage of list price, formularies can tier by clinical value instead of rebate size—which may mean fewer prior auths for a biosimilar that should've been covered in the first place (wishful thinking, perhaps).

In summary, PBMs are getting squeezed by federal reform, state-level divestiture fights, and FTC enforcement—all aimed at the same thing: breaking the link between drug prices and PBM profit. Most of the meaningful changes are slow and messy, and PBMs are already adapting by shifting toward fee-based models that preserve margins. For us physicians and our patients, the practical question is whether these moves translate into simpler coverage and lower out-of-pocket costs, or just a new set of incentives wearing a cleaner label.